Energy Security: Economics, Politics, Strategies, and Implications

Energy Security Carlos PascualEnergy security has become a top priority issue for the United States and countries around the globe, but what does the term “energy security” really mean? For many it is assuring the safe supply and transport of energy as a matter of national security. For others it is developing and moving toward sustainable and low-carbon energy sources to avoid environmental catastrophe, while still others prioritize affordability and abundance of supply.

The demand for energy has ramifications in every part of the globe —from growing demand in Asia, to the pursuit of reserves in Latin America and Africa, to the increased clout of energy-producing states such as Russia and Iran.

Yet the fact remains that the vast majority of global energy production still comes from fossil fuels, and it will take a thorough understanding of the interrelationships of complex challenges —finite supply, environmental concerns, political and religious conflict, and economic volatility —to develop policies that will lead to true energy security.

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With the US-Asia Pacific Comprehensive Partnership for a Sustainable Energy Future adopted at the 2012 December Summit in Phnom Penh, the U.S. has committed over $6 billion for the 5-year period (2012-2017), including Ex-Im Bank’s low-interest $5 billion for export support, OPIC’s $1 billion loan for energy projects, $1million from USTDA and DOS’s Capacity Development Fund for technical support and project development. OPIC representative reiterated OPIC’s priority for technology transfer in renewable energy as the US industry has made significant progress, particularly in wind, solar and thermal power production.
In Vietnam, the U.S. Export Import Bank has committed $1 billion in support of a wind farm in Bac Lieu province.
Note: The U.S. Energy Information Administration estimates the U.S. is surpassing both Russia and Saudi Arabia this year to be the world’s biggest producer of oil and natural gas. A few years ago, hydrocarbon exports from the United States were negligible. But by the start of 2013, oil, natural gas, and petrochemicals had become the single largest category of U.S. exports, surpassing agricultural products, transportation equipment, and capital goods. The shift in the U.S. trade balance for petroleum products has been stunning. In 2008, the United States was a net importer of petroleum products, taking in about two million barrels per day; by the end of 2013, it was a net exporter, with an outflow of more than two million barrels per day. By the end of 2014, the United States should overtake Russia as the largest exporter of diesel, jet fuel, and other energy products, and by 2015, it should overtake Saudi Arabia as the largest exporter of petrochemical feedstocks. The U.S. trade balance for oil, which in 2011 was −$354 billion, should flip to +$5 billion by 2020.